Hosp. Auth. of Metro. Gov't of Nashville v. Momenta Pharm., Inc.

353 F.Supp.3d 678

The HOSPITAL AUTHORITY OF METROPOLITAN GOVERNMENT OF NASHVILLE and Davidson County, Tennessee, d/b/a Nashville General Hospital and American Federation of State, County and Municipal Employees District Council 37 Health & Security Plan, Plaintiffs,

v.MOMENTA PHARMACEUTICALS, INC. and Sandoz Inc., Defendants.

No. 3:15-cv-01100

United States District Court, M.D. Tennessee, Nashville Division.

Filed December 5, 2018

Adam Gitlin, Brendan P. Glackin, Bruce W. Leppla, Dean M. Harvey, Katherine C. Lubin, Lieff, Cabraser, Heimann & Bernstein, LLP, San Francisco, CA, John Tate Spragens, Mark P. Chalos, Lieff, Cabraser, Heimann & Bernstein, LLP, Nashville, TN, for Plaintiffs.

Bradley D. Justus, Daniel K. Oakes, Michael L. Keeley, Richard B. Dagen, Axinn, Veltrop & Harkrider, LLP, Washington, DC, Jason T. Murata, Jeremy Lowe, Thomas Rohback, Axinn, Veltrop & Harkrider, LLP, Hartford, CT, Virginia M. Yetter, Robert Dale Grimes, Bass, Berry & Sims, Nashville, TN, Andrew Hatchett, Anthony Thomas Greene, Kara F. Kennedy, Liz Broadway Brown, Matthew Kent, Michael P. Kenny, Teresa T. Bonder, Alston & Bird LLP, Atlanta, GA, Nell G. Moley, Alston & Bird LLP, San Francisco, CA, Timothy L. Warnock, Riley, Warnock & Jacobson, Nashville, TN, for Defendants.

MEMORANDUM OPINION

WAVERLY D. CRENSHAW, JR., CHIEF UNITED STATES DISTRICT JUDGE

Pending before the Court is Momenta Pharmaceuticals, Inc. ("Momenta") and Sandoz Inc.'s ("Sandoz") (collectively "Defendants") Motion to Dismiss for Lack of Jurisdiction Under Fed. R. Civ. P. 12(b)(2) (Lack of Personal Jurisdiction), Motion to Dismiss for Lack of Jurisdiction Under Fed. R. Civ. P. 12(b)(1) (Lack of Subject-Matter Jurisdiction), and Motion to Dismiss for Failure to State a Claim Under Fed. R. Civ. P. 12(b)(6). (Doc. Nos. 195, 195, 197.) Nashville General Hospital ("NGH") and American Federation of State, County and Municipal Employees District Council 37 Health & Security Plan ("DC 37") (collectively "Plaintiffs") have filed responses to Defendants' motions (Doc. Nos. 208, 209, 210), to which Defendants have replied (Doc. Nos. 213, 214, 215). For the reasons below, the Court will (1) grant Defendants' Rule 12(b)(1) motion to dismiss; (2) deny Defendants' Rule 12(b)(2) motion; and (3) grant in part and deny in part Defendants' Rule 12(b)(6) motion.

A. Procedural Background

On October 14, 2015, NGH filed its initial complaint against the Defendants, alleging four separate counts under the Sherman Antitrust Act ("Sherman Act"). (Doc. No. 1.) NGH sought damages, as well as declaratory and injunctive relief. (Id. at 27.) NGH brought its claims on behalf of itself and a nationwide class of persons and entities, pursuant to the Class Action Fairness Act of 2005 ("CAFA") and Fed. R. Civ. P. 23(a) and (b). (Id. at 6, 21.) As explained in more detail in Section B infra, the alleged Sherman Act violations centered on the role that Defendants played in a conspiracy to monopolize the production and distribution of enoxaparin, a generic version of the drug Lovenox®. (Id. at 4-23.)

In response to the complaint, Defendants filed a motion to transfer the case to the District of Massachusetts and a motion to dismiss. (Doc. Nos. 65, 68.) Momenta additionally filed a separate motion to dismiss or transfer for improper venue. (Doc. No. 62.) On September 29, 2016, Magistrate Judge Barbara Holmes entered a Report and Recommendation recommending that the motions be denied. (Doc. No. 114.) Defendants filed joint and separate objections to the Report and Recommendation. (Doc. Nos. 117, 119.) On March 21, 2017, the Court issued a Memorandum Opinion that adopted in part and declined to adopt in part the Report and Recommendation. (Doc. No. 134.) The Court dismissed NGH's Sherman Act claims, to the extent that NGH sought damages in connection with those claims. (Id. at 8-14.) The Court found that NGH did not have standing to seek damages for its Sherman Act claims under the "indirect purchaser rule." (Id. ) However, NGH's Sherman Act claims were permitted to proceed on declaratory and injunctive theories of relief. (Id. at 16.)

Thereafter, NGH filed a motion for leave to file an amended complaint. (Doc. No. 140.) The amended complaint contained three primary changes: (1) the addition of DC 37 as a new representative plaintiff; (2) the addition of various state antitrust and consumer protection claims; and (3) the addition of new substantive allegations pertaining to Defendants' alleged anticompetitive conduct. (Doc. No. 141 at 5.) Defendants filed a response in opposition. (Doc. No. 148.) Ultimately, Magistrate Judge Holmes granted Plaintiffs' motion for leave to file an amended complaint, and Plaintiffs filed their amended complaint on December 21, 2017. (Doc. No. 191.) Defendants then filed the instant motions to dismiss.

B. Factual Background

NGH is a metropolitan charity hospital that purchases certain drugs it administers, including the generic anticoagulant enoxaparin. (Doc. No. 191 at 6-7.) DC 37 is a non-profit health and welfare benefit plan covering public sector employees, retirees and their families. (Id. ) Plaintiffs allege that they have, and will continue to, indirectly purchase and/or provide reimbursement for Lovenox® and enoxaparin. (Id. at 7-8.)

The drug at issue, enoxaparin, is used in the prevention and treatment of deep vein thrombosis and in the treatment of heart attacks. (Id. at 10.) Sanofi-Aventis ("Aventis"), a non-party to this lawsuit, brought enoxaparin to market in the United States under the brand name Lovenox® and held a patent on the drug, which was subsequently held to be unenforceable in 2007. (Id. at 10-11.)

However, Momenta is the assignee of a patent (the "886 Patent") for a chemical process used to test the quality of enoxaparin ("Method < 207>"). (Id. at 13.) In 2003, Momenta entered into a collaboration agreement (the "Collaboration Agreement") with Sandoz, whereby Sandoz eventually began manufacturing and selling generic enoxaparin. (Id. at 11-14.) The Collaboration Agreement provided for profit-sharing between Momenta and Sandoz, with regard to Sandoz's sales of its generic enoxaparin, so long as Defendants remained the sole source of generic enoxaparin in the United States. (Id. at 13.) Further, the Collaboration Agreement provided for Momenta to receive "milestone payments" if Sandoz remained the sole supplier of generic enoxaparin. (Id. ) Essentially, the Collaboration Agreement provided Momenta with a powerful incentive to use whatever rights it had to prevent other parties from entering the generic enoxaparin market.

By 2007, Aventis had requested that the United States Pharmacopeial Convention ("USP") adopt criteria for enoxaparin that included a standardized test to assure that enoxaparin produced by drug companies in the United States met chemical criteria approved by the FDA.¹ (Id. at 16.) Aventis's proposed method for testing enoxaparin was Method < 207>. (Id. ) At that time, Aventis had a pending patent application for Method < 207>. (Id. at 17.) Defendants, who participated in the relevant USP review panel, objected to Aventis having a patent that covered a standardized USP test, contending that the test, once adopted, should be free for anyone to use. (Id. ) After discussions with USP, Aventis agreed to abandon its patent application. (Id. at 18.) However, unbeknownst to the USP panel, Momenta had its own patent application pending—the 886 Patent—that, when granted, would give Momenta patent rights that could be asserted against third parties that used Method < 207>. (Id. at 18-19.) In December 2009, the USP approved and adopted Method < 207> as the standardized test to assure enoxaparin quality, and the 886 Patent was issued shortly thereafter. (Id. at 13, 19.) Plaintiffs allege that, had Defendants disclosed their own application for the 886 Patent, the USP would have either required Momenta to abandon its patent rights, as it did with Aventis, or chosen an alternative test that would not have been subject to patent protection. (Id. at 19.)

Defendants became the first entities authorized by the FDA to produce generic enoxaparin. (Id. at 20.) Thereafter, Amphastar Pharmaceuticals, Inc. ("Amphastar"), a non-party to this case, received FDA approval to sell generic enoxaparin on September 19, 2011. (Id. at 21.) Upon approval, the FDA instructed Amphastar to use the USP compendium for enoxaparin, including Method < 207>. (Id. ) Two days later, Defendants sued Amphastar in the District of Massachusetts, contending that it was essentially illegal for Amphastar to comply with Method < 207> and produce generic enoxaparin because it could not do so without infringing on the 886 Patent. (Id. ) After filing their complaint, Defendants obtained a temporary restraining order and preliminary injunction preventing Amphastar from selling enoxaparin. (Id. at 22.) However, the U.S. Court of Appeals for the Federal Circuit stayed the preliminary injunction in January 2012 and vacated it in August 2012. (Id. )

In July 2013, the U.S. District Court for the District of Massachusetts granted Amphastar's motion for summary judgment, finding that Amphastar did not infringe on the asserted claims of the 886 Patent. (Id. at 22-23.) Defendants appealed the district court's order, and the U.S. Court of Appeals for the First Circuit vacated the district court's grant of summary judgment. (Id. at 23.) In July 2017, a jury found that Momenta's 886 Patent was invalid for lack of enablement and lack of written description. See Momenta Pharm., Inc. v. Amphastar Pharm., Inc., No. 1:11-cv-11681-NMG, Doc. No. 1081 (D. Mass. July 21, 2017) (jury verdict in favor of defendants).² The district court accepted post-trial briefing and, on February 7, 2018, issued its post-trial orders, upholding the jury's verdict. See Momenta Pharmaceuticals, Inc., Doc. Nos. 1134, 1135, 1136, 1137, 1138, 1139, 1149. Defendants have sought an appeal of this order before the Federal Circuit. See Momenta...